US President Joe Biden has barred Americans from investing in dozens of Chinese companies in the defence sector or whose surveillance technology aids in serious human rights abuses, broadening a blacklist started by the Trump administration last year.
The move is aimed at ensuring that "US investments are not supporting Chinese companies that undermine the security or values of the United States and our allies", the White House said in a fact sheet on Thursday.
The order prevents American investment from supporting the Chinese defence sector, while allowing the US government to better address "the threat of Chinese surveillance technology firms that contribute - both inside and outside China - to the surveillance of religious or ethnic minorities or otherwise facilitate repression and serious human rights abuses", it added.
China, in its response yesterday, accused the US of suppressing Chinese firms and issued a thinly veiled threat to take necessary measures to safeguard the rights and interests of these companies.
The executive order signed by Mr Biden takes effect on Aug 2, and gives American investors a year to divest themselves of stocks affected by the blacklist.
Fifty-nine companies are on the updated list, up from the 44 blacklisted by the time Mr Donald Trump's presidency ended in January.
The targeted companies include technology giant Huawei, as well as many state-owned companies and their subsidiaries in aerospace, construction, electronics, shipbuilding and other industries, including video surveillance equipment company Hikvision, which the United States says is linked to the repression of Uighur Muslims in Xinjiang.
The Biden administration also moved management of the blacklist from the Defence Department to the Treasury Department, which has more experience in administering sanctions.
The move reflects Mr Biden's continuation of his predecessor's hard-line approach to China, but fine-tunes it to avoid confusion and stave off lawsuits, said analysts.
"While there is considerable continuity between the Trump and Biden administrations on this issue, the updated executive order provides needed clarity on what entities are subject to prohibitions," said Centre for a New American Security senior fellow Martijn Rasser.
"The amended executive order is also stronger in that it centres its prohibitions on companies in specific sectors rather than on ties to the Chinese military, connections which can be murky," he said.
The Trump administration's approach of basing the blacklist on military links opened it to court challenges and put the onus on the US government to prove those links, which took time and resources and might have involved needing to disclose classified information, Mr Rasser told The Straits Times.
For instance, Chinese smartphone maker Xiaomi was temporarily removed from the blacklist after a federal judge questioned the reasoning behind the Defence Department's decision to include it as one of the companies with military links.
Last year's White House order also created confusion on Wall Street as the New York Stock Exchange flip-flopped on whether to delist China Mobile, China Unicom, and China Telecom in line with the Trump administration ban.
"By focusing the prohibitions on defence and surveillance tech firms, the order is on stronger legal footing," said Mr Rasser.
Yesterday, Chinese foreign ministry spokesman Wang Wenbin said: "The US government has broadened the concept of national security, abused its national power, and unscrupulously suppressed and restricted Chinese companies. The Chinese side firmly opposes this.
"The relevant actions of the United States violated market laws, disrupted market rules and order, and damaged not only the legitimate rights and interests of Chinese companies, but also the interests of global investors, including American investors."
While urging Washington to cancel its various blacklists and give Chinese companies a fair, just and non-discriminatory business and investment environment, Mr Wang also said: "China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises."
Analysts said the executive order also highlights Mr Biden's greater focus on human rights.
"The amended executive order makes it clear that the US government views the proliferation of Chinese surveillance technology and its illiberal use to be a threat to US national security and democratic norms and values," said Mr Rasser.
"This is certainly in line with the Biden administration's views of the dangers of creeping techno-authoritarianism."
